tv U.S. House of Representatives CSPAN April 28, 2010 5:00pm-8:00pm EDT
and what really is outrageous about this report, representative akin, is they had it over at d.h.s. before we had the final vote on obamacare and they were sitting on it. their language is, we didn't want to influence the debate. isn't that what a report is all about? mr. akin: with facts? my goodness, people might not vote for this thing. mr. lamborn: it's more expensive and going to raise taxes and throw people out of the insurance they have now than what the administration is claiming. if we had known this, maybe it wouldn't have passed by the four or five votes that it passed by. maybe it would have failed and we would have been in a different trajectory if they were honest and we should have had access to. . mr. akin: this is a mushroom treatment. you keep them in the dark,
smother them in some sort of fertilizing material and we tell them these things, if you like your doctor you'll be able to keep your doctor, period. if you like your health care plan you'll be able to keep your health care plan, period. nobody will be able to take them away. the reports you are talking about makes it clear that this is flat out not true. it is a frustrating thing and it is in a sense all of these things are falling out now and it wasn't so obvious before. my good friend from louisiana, congressman scalise, please join us. mr. scalise: well, i thank the gentleman from missouri. you know, this latest smoking gun that's come out is just one more example of why the american people are so angry about what happened with this government takeover of health care, with the way it was rammed through, with all the broken promises, and you can go back to the very beginning when the president was candidate and said multiple times, all of these hearings would be on c-span so you can have transparency and find out what's going on and in fact
none of that transparency happened, none of those meetings was aired on c-span. and now we have this document that came out just two weeks, three weeks after the vote that barely passed by three votes that confirms what we were saying that this would actually raise the cost of health care for most american families at a time when we should be lowering the cost of health care, like our bill did that we filed that actually would have addressed the real problems in health care. but in fact their bill does the opposite and now it's confirmed that. what i really want to find out is, when did the administration know about this report? was this report produced by c.m.s., a federal agency, before the vote and then covered up? literally held under wraps so that this couldn't become public until after the vote when the american people would see once again yet another promise by this administration on health care was broken with their government takeover. mr. akin: it's an incredible question, isn't it? the control of the information, the spin on the whole thing,
the problems of it being a transparent process, it's going to be on c-span, everybody can watch it. were any of you gentlemen -- we have a couple of our doctors that left but, dr. roe, were you invited in taking part in the drafting and putting this bill together, were you allowed to go into their meetings? i think that's an important question. mr. roe: i'm smiling because this actually is kind of funny. what happened, the president last july said he would go over this line by line with any congressman that would like to go over this bill. so i wrote the president the next day, and then was on gretta van sut ren -- sustern four or five times. we tried phone and letter. we never did hear one word back. and the physician's caucus with over 400 years experience, not one of us was consulted in a
meaningful way. that's one of the reasons i practiced medicine, congressman akin, for over 40 years in johnson city, tennessee, and got myself elected -- left my practice and went to congress to become part of the debate i was never included in any way whatsoever. mr. akin: so i guess from what you're saying -- let's just have a quick summary. 31 years in medicine. thought you knew something about medicine. decided to take the huge amount of effort to come to congress so you'd have something to say about the debate and in spite of the fact that you tried everything other than carrying your pigeon and smoke signals the white house refused to go line by line, so the logical thing is you are going to run for president, is that where we're going? mr. roe: no, no, that's not where we're going. a couple things i want to go over i think our seniors get -- and all of us here understand this. one of the things as a
physician that bothers me about it, and dr. gingrey was here a moment ago, our concern is the quality of care that our patients are going to get. and when you take our senior citizens and you cut the new c.m.s. estimate is $575 billion out of a medicare plan and, remember, beginning next year, 2011, we begin to add the baby boomers at three million per year so in the next 10 years we are going to add 35 million, 36 million more people to the medicare plan with almost $600 billion less money. let me tell you three things that will happen. one, you'll have decreased access to your doctor. two, you'll have decreased quality of care because you can't get to your doctor. and number three, it's going to cost you more money. the seniors understand that. i understand that and the american people understand that. mr. akin: you know what you just said is so common sense and straightforward. you're going to take how many more people and put them into medicare? mr. roe: 36 million. mr. akin: 36 million more
people go into medicare. you don't have to be too much of a wizard on business. 36 million people go into medicare that weren't there before. it's going to cost more money. and then what you're going to do is you're going to cut, what is it -- mr. roe: $575 billion. mr. akin: $575 billion out of the program. so now you're doing two things. one, you're adding millions of people into the program. you're taking billions of dollars out of the program, and you're saying, hey, maybe your health care -- quality of health care is going to go down. that's pretty straightforward. mr. thompson: will the gentleman yield? mr. akin: i will yield to my colleague from pennsylvania, mr. thompson. mr. thompson: i want to go to the balanced budget act of 1997 where similar cuts were made to the medicare program. we have been told we were making things up by our democratic colleagues. they don't know how to deal
with the fact. they don't know how to deal with reality. there was -- the medicare part b cuts have been made. today in this country we ration health care services. we government -- we ration government services. i was a home -- anyone going for patient therapy, speech therapy, you're going to an outpatient clinic or into a skilled nursing facility because you've had some type of a disease or disability that disabled you that you need rehabilitation services. you know today the federal government under medicare part b rations those services? there is a cap that is placed on how much services you receive on an annual basis. i know that because i was the person responsible in my facility to track where those patients were in terms of that cap. and when they reached that cap we had to serve them notice and their family members notice that they were no longer
eligible for medicare, for medicare part b, specifically, for those rehabilitation services. and you think about the people who wind up in skilled nursing facilities. they are the sickest of the sick. these are the people who with no other place to go for the type of compassion and care that they need to receive. and yet there's an example of how we ration already. going forward, i -- i want to read a report from the actuary on this medicare part b so we have that language. this is according to c.m.s., centers for medicare and medicaid service. mr. akin: this is the report that has now just been released conveniently after the bill was voted on. mr. thompson: mr. president, when did you have this report and why didn't congress not have it? i quote. as the actuaries put it, quote, therefore, it's reasonable to expect that a significant portion of the increased demand for medicaid will be difficult to meet, particularly over the next few years. and they continue, quote, for
now we believe that consideration should be given to the potential consequences of a significant increase in demand for health care, meaning a relatively fixed supply of health care providers and services. mr. roe: will the gentleman yield? mr. thompson: let me finish. in other words, there will be shortages of physicians and hospitals and that really amounts to having less access to quality of care. mr. akin: less access or as you used the word rationing. my good friend from missouri, did you want to jump in at that point? >> no. mr. akin: dr. roe. mr. roe: let me give you just one quick example. you talk about rationing of care. in the state of tennessee, what we did for our 10 care plan is cut the rolls -- our tenncare plan is cut the rolls. we are going to limit doctor access to 10. visits per year unless something can be done in the budget and a grand total of a hospital pay of $10,000. i don't care if you have a massive wreck and your bill is $100,000, the state will pay
$10,000. and in rehabilitating services, as of july right now, unless something changes before the end of the state legislature, there will be no rehabilitative services. you have a knee replacement, you just going to have to rehabilitate it on your own because the state cannot afford to pay for it. mr. akin: wow. mr. roe: that is rationing of care going on with a government plan. and we just voted to massively expand this plan. mr. akin: i have not jumped in from a personal point of view because you guys are all experts. i'm just the poor sucker that receives the services. i'm a cancer survivor. i happened to take a look at the cancer survival rate in foreign countries that have socialized medicine. you know the u.k. survival rate of cancer in men is a whole lot less than it is in the u.s. well, why would that be? is it that the cancer technology is different? i don't think so. i think the deal on cancer is if you got it you won't get
treated as quick as you can. so what happens in the u.s., you don't have the same waiting line. now, you start putting those waiting lines in and it starts to affect your statistics of what's going to happen on a disease. and that's what we talk about when you all of a sudden hear your doctor say, oh, by the way, you're doing great. blame the little detail, you have cancer. that kind of gets your attention and you think, i have to get that dealt with right away. they say, well, that's just fine but you are going to have to wait for whatever it is. you are going to have to wait six months to get treated. you have melanoma, that's probably not a good idea to be waiting six months. i have a good friend that's a doctor friend of mine, steve smith, and he's told me that on these kinds of things you just want waiting lines, you just don't want socialized medicine. and his idea to be the doctor friends we have down here, just repeal this piece of junk, that's what he says. my good friend from missouri, congressman luetkemeyer.
mr. luetkemeyer: thank you. i think at the end of the day everybody understands what's in this bill. it's not good for our country, it's not good for our people. it's impacting everybody in a negative way. and i think the only alternative is to replace and repeal it. i think at some point we are going to be able to do that. i think it's imperative that now we have seen what's in it and, again, have another report that's come out that shows it's going to cost more than anticipated, this thing is a boondoggle. it's got to be replaced. it's good to be repealed. this will lead us over the cliff as the gentleman from tennessee talked about tenncare. the massachusetts plan continues to go over a cliff as well. we're headed over that cliff with our national health care as well. so i yield back to the gentleman. mr. akin: thank you. dr. roe, last word. thank you very much, mr. speaker. appreciate your joining us here tonight and thanks, everybody, for being part of an important discussion, ongoing story.
the speaker pro tempore: for what purpose does -- under the speaker's announced policy of january 6, 2009, the gentlewoman from california, ms. speier, is recognized for 60 minutes as the designee of the majority leader. speier speier thank you, mr. speaker. and i am joined this evening with a number of colleagues who are going to give us, i think, the reasons why financial reform is a must in this country and the biggest poster child for why we have to do financial reform really is in goldman sachs. and so we thought we would start our discussion tonight by looking at the principles that goldman sachs has promoted on its website.
there are 14 principles that goldman sachs has promoted on its website. the very first, the one i'd like to start out is, our clients' interests always come first. well, let's talk about their clients' interests coming first. let's speak precisely about one deal, the deal called advocates. and in abbicus, their clients were many people. they had a client named john paulson, the biggest hedge fund individual in this country, and he wanted goldman to sell mortgage-backed securities that were bad. they were subprime. and he precisely wanted them to
sell them to many of their clients, and he was going to short them. meaning he was going to bet against them. but it just doesn't end there. he specifically designed the package. he hand picked the mortgages that were going to be in the package, and then goldman sold them to unsuspecting buyers and low and behold what happens? what happened was mr. paulson made a billion dollars, and the other clients of goldman sachs lost a billion dollars and goldman sachs walked away with $50 billion of fees that were paid to him -- paid to goldman sachs by mr. paulson. now, that is the basis of the
f.c.c. complaint filed against goldman sachs for civil fraud. so what is civil fraud you might ask? civil fraud is, it shall be unlawful for any person in the offer or sale of any securities to obtain money or property by means of any untrue statements of a material fact or any omission to state a material fact necessary. so the question is, was it a material fact that they were made up of these mortgage-backed securities, 90% of which were considered no dock mortgages -- mortgages? that mines there was no documentation that the people that got those mortgages could pay for them. there was no documentation of income, no documentation of debt. those were no doc loans and there were history of no doc
loans going back. so it was fixed from the very beginning. they were arranged by john paulson, a material fact that was not disclosed to the other buyers. and it was not disclosed to the other buyers that john paulson created this because he wanted to short them. because he wanted to bet against them. so, if there ever was a case of fraud, i would argue that that was a case of fraud. and yet goldman sachs says, our very first priority is clients come first. let's move over here to number 40. integrity and honesty are at the heart of our business. we expect our people to maintain high ethical standards in everything they do, both in their work for the firm and in their personal lives. well, there's one gentleman who has worked for goldman sachs that they refer to as the
fabulous fab. he's a gentleman by the name of fabrice tory out of their office in london. well, i wouldn't suggest to you that mr. tory is fabulous. i would suggest to you that he's fraudulent. in some of the emails that the senate committee on investigations was able to collect, this is what mr. tory was saying. now, mr. tory is the individual who was selling these synthetic debt obligations. so what did he say? he said, the whole building is about to collapse any time now. those were mr. tourre's words. he described himself in an email as the only potential survivor, the fabulous fab, standing in the middle of all these complex
highly leveraged exotic trades he created with necessarily understanding all of the implications of these monstrosities. he then went on to say in an email in 2007, he described the mortgage business as, quote, totally dead and the poor little subprime borrowers will not last too long. yet two months later he was boasting that he continued to dump some of the worthless mortgage securities on, and i quote, widows and orphans that i run into at the airport. this is the man of integrity and honesty. i would suggest that is not the case. and finally, in an email to his girlfriend he called his frankenstein creation, the synthetic c.b.o.'s, a product of pure intellectual masterbation. the type of thing which you
invent telling yourself, well, what if we created a thing which has no purpose, which is absolutely conceptual and highly theoretical and which nobody knows how to price? that's mr. tourre, who yesterday when he testified said, and i quote, i firmly believe that my conduct was correct. that is mr. tourre. that is goldman sachs. i'd like to now ask my good friend, mr. yarmuth from kentucky, to join me in this colloquy. mr. yarmuth: i thank the gentlewoman. it's a great pleasure to be here today to discuss with the american people the fundamentals of the problem that we're trying to deal with with the wall street reform legislation now working its way through congress. and i had the privilege in the last congress to be a member of the oversight and government
reform committee when all of this was unfolding. in the fall of 2008 when for the first time people were getting a sense that wall street was essentially operating like an unregulated casino. it was essentially the wild west of finance. and, you know, my economics training as skimpy as it may have been taught me that the financial system is -- in our capitalist form of government, in our free market, is supposed to help with the allocation of capital in its most productive way. so that capital fines -- findsity most productive uses. and what we found looking at these incidents as they unfolded in 2008 and as we have seen even until the last couple of weeks is that the giants of the financial system in this country, goldman sachs, the other major wall street financial institutions, weren't
guiding capital to its most productive use. they were guiding capital, hoarding capital, accumulating enormous sums of capital, in some cases essentially creating capital out of the ether and deploying it for their own very greedy use. and i know that when we've had arguments both inside of congress and out over the last few years we say, well, why would this economy, why would government allow these institutions to get so big that they can wield this kind of power? and the answer we always got from the goldman sachs of the world and from others was, well, we need to be that big so we can compete in the global economy. the question they've never answered to my satisfaction, i don't think to the congresswoman's satisfaction and certainly i don't think to the american people's satisfaction, is, competing for whom, for
what, to what purpose? because if we allow, as a society, companies to get that big where they can threaten to bring down the entire economy and they don't produce any good for society at large, then why do we care if they can compete? who are they competing for? are they competing just for their stockholders? the case of goldman, are they competing just for their partners who take home $13 billion, $15 billion worth of bonuses each year? that's the question i think that is at the core of this debate and has to be as we move forward trying to decide exactly what policies we should adopt. in goldman's case, as i mentioned, i think in 2009 the total bonuses they've allocated for their partners, their principles and their employees is something like $13 billion. do you know how much their federal tax rate was? .9%. .9%. now, virtually every american
pays a higher tax rate than that. goldman sachs paid less than 1% of its net income in taxes. while its principles and its employees, its top earners were making millions upon millions. so we have to say, does society benefit from having goldman sachs here? no. i think we can make a pretty strong case that over the next couple of years this country has -- past couple of years this country has suffered enormous damage and not just in new york but throughout the country, throughout main street, with defaults, mortgage -- collapse of banks, all sorts of things. the enormous problems with a.i.g. and its cost to the taxpayers when we had to bail them out, largely attributable to the type of activity that goldman and others were involved in. so, as we look through goldman's business principles and i think you've done an excellent job of
pointing out some of the ironies , to use a gentle term, some of the ironies involved in those principles, we have to ask ourselves, what are goldman's principles for being part of the american economy? where does -- where do we show that they want to help our economy prosper? no, this is for their shareholders, their principles and their clients who are among the wealthiest individuals in the world. so, while we worry about what goldman has done and i think most of us, most americans are outraged, if nor nothing -- if for nothing else the ethical shortcomings of the techniques that they've been using, we have to ask ourselves as well, what good does goldman sachs, what good does a bear stearns, may it rest in peace, and lehman
brothers, what good do they do for the american economy? because i think the evidence is pretty strong that in fact they have been extremely detrimental to the american economy and to the average american in their activities over the last few years. and i yield back. ms. speier: would the gentleman yield a moment for a question? mr. yarmuth: certainly would yield. ms. speier: you mentioned that they paid a tax rate of less than 1%. the average american pays a tax rate of what? mr. yarmuth: well, actually as we heard just a few weeks ago about 47% of the lowest income earners in america pay almost no tax. i think -- no income tax. they do pay significant employment taxes, social security and medicare. in fact, every american worker pays 7.5% combined social
security and employment tax. income tax will vary from -- i think the average federal income tax, even people making $40,000 to $50,000 was in the 3% or 4% range, which is still three or four times what goldman sachs was paying and of course once you get to the higher levels, the federal income tax rate is somewhere -- i think the average american making more than $250,000 a year pays an average of 23%. that's just somebody making $250,000, $300,000 a year, not the billions and billions of dollars that goldman sachs has made, they pay 23% on average more than goldman sachs paid. ms. speier: thank you. i now recognize my good friend from the state of oregon, peter defazio. mr. defazio: i think the american people are a bit confused as to what's really going on here. and it's, you know, a lot like
the humphrey bow gart movie, what's going on here is gambling, plain and simple. it would be one thing if these so-called investment banks like goldman sachs were lending into the productive sector of the u.s. economy. if they were lending to people who have good ideas to produce products and goods and employ americans and help us, you know, compete in the world economy. but they're not doing that and in this case they weren't even helping to package and move mortgages off of people's portfolios and some place else. they were merely mimicking with what are called synthetic collateralized debt obligations, packages of bad or potentially bad mortgages to bet on. you know, for this one hedge fund to bet against and make $1 billion. but then of course unfortunately other parts of goldman sachs,
apparently unbenones to them, i mean, in totally good faith, wednesday to clients of goldman sachs and said, hey, we've got a great product here we'd like to sell you, unfortunately other parts of goldman sachs had assembled this product with the intention that it would fail and these other people were not informed of that fact in purchasing them, although goldman would say they didn't have an obligation to tell people that they had designed it to fail, working with someone who is betting on it to fail. goldman itself was betting on it to fail. but the bottom line of all this is, it's a huge amount of churning on things that don't help our economy, help the american people, help us compete in the world. goldman has gone to the point in 2007 their gambling income, excuse me, their financial services investment, you know, self-proprietary etc. stuff, whatever you want to call it, was actually five times larger than their investment banking
activities. so 20 cents of every $1 at goldman was going into productive investment. the other 80 cents was going into gammling on imaginary products. it's a lot like fantasy football, a lot of americans can understand that. imagine if they took out and created synthetic, you know, products that related to fantasy football, maybe some americans can understand that. recently one firm actually proposed to do futures on movies so in l.a. they would produce a movie and then the people on wall street would bet on what the opening weekend was going to return and they would bet on how much money it might make, this became of such concern to producers in l.a. because they thought, my god, if they start out shorting us right away
that's going to depress, you know, our investment potential for the movie, etc., etc. in the senate bill they're actually banning this sort of derivative. they banned two kinds of derivatives. onions, you can't do them on onions and the second is movies. you can bet on anything. you can bet on the weather tomorrow as a derivative. you could market on wall street, etc., etc. this is not a productive activity. i would suggest a simple way to do it. then thing that's good is the senate has produced something useful which is to say that if goldman wants to have a propry taret trading section and trade -- proprietary trading section that they can't be insured by the fdic or draw money through special windows of the treasury. we shouldn't subsidize their
addiction to gambling. that would be a good step. but the other thing we could do was put a very modest tax on this gambling and to say, look, you know, for legitimate hedgers who want to hedge against fuel price increases, farmers who worry about the crop, hedgers and speculators, we say hedgers would be exempt from the tax. but speculators who aren't producers or even worse, aren't even actually involved in any way as a counterparty but merely creating synthetic things to bet for or against, they'd pay a modest tax. if the tax was approximately .2%, that's point zero, zero, zero two on each of these -- on each of these trades, we could raise somewhere between $30 billion to $50 billion a year
to help pay for some of the damage they have caused to our economy. it might not raise that much because it might rein in some of this speculative activity which i think would be a desirable impact. i suggest that would be one way to do that very, very reckless activity. i congratulate the gentlelady for having this hour to highlight some of these concerns and the contradictions that we see in the business principles versus what we all saw go on. so with that i'd yield back. speier speier i thank the gentleman -- speier speier -- ms. speier: i thank the gentleman for his comments. now i'd like to recognize elijah cummings. mr. cummings: i want to thank the gentlelady for yielding and i want to thank all my colleagues for being here tonight. as i listened to my colleagues this evening, i could not help but think that the american people have lost in at least
two ways. one, they have lost with regard to investments, money that they could be making on the market. and, two, they've lost because the so-called swaps that were purchased, these insurance -- what we would call insurance, for those people who would be listening, mr. speaker, some of that money, particularly the ones that we're dealing with right now were bought from a.i.g. and a.i.g., when these bonds went down, a.i.g. ended up paying. and folks may be asking the question, what does that have to do with me? well, the fact is that when those bonds were paid off, those are the kinds of --
because they were paid off from a.i.g., just like an insurance policy would pay, a lot of money had to go into a.i.g. to keep it propped up to the tune of $280 billion with a b. and i cannot help but think about yesterday when i heard from fabulous fab -- ms. speier: fraudulent fab. mr. cummings: when i heard him i heard no remorse. i heard folks basically saying this is the way we do it, this is how we do it. and almost implying that it was none of our business. none of the business of the senate or the house. and the sad part about as i sat here, i almost wanted to come through the television screen because i thought about all of the people who have lost so
much, had lost so much over the last few years. the people who have lost their homes, lost their savings, lost their jobs, lost opportunities, children cannot go to school, they can't get loans, and yet and still folks sitting there from goldman almost acting as if, you know what, don't even bother asking us about what we do, it's our business. well, it's not just their business because it affects almost every single american the types of things that they do. and that's why 60 members of this congress wrote to the s.e.c., and i'm very glad to see ms. shapiro, mary schapiro taking over the s.e.c. and
doing what needs to get it done. say, i'm glad you are doing the civil action but you need to look at other deals similar to this one because we need to get to the bottom of this. and we also said that if any money was paid from a.i.g. to goldman or paulson -- and paulson and it was ill-guided, we want our money back. but we said another thing. we said that if there appears to be criminal activity we want it referred to the justice department so they can take appropriate action. now, let me be clear. i live in baltimore. there are people in my neighborhood in the inner city of baltimore that if they stole a $300 bike they go to jail,
period. a $300 bike. and i cannot -- and the reason why it's so important to me that we look at this -- all these other transactions and try to figure out if there was criminal activity, because i want the folks on wall street to be treated like the folks on madison avenue in baltimore. i think what we're doing here is so important. i think we are at the tip of an iceberg, but we have got to chizzle down. and the gentlelady when she first started our discussion she said reform is so important that we got to deal with reform now. and i think when you look at what has happened in this bill, as it's been so wonder flee and accurately described by --
wonderfully and accurately described by my colleagues, we understand why it is so important to have transparency. ms. speier: will the gentleman yield? mr. cummings: yes, i yield to the gentlelady. ms. speier: when you speak to the term transparency, do you think goldman would have sold a dollar's worth of those synthetic collateralized debt obligation if people knew that their other client was shorting them and that 90% of them were no doc loans that were destinned to fail? mr. cummings: no, i really don't. and i think that, you know, i've often said -- i've said that goldman and they said their slogan is our customers always come first. ms. speier: very first principle, our clients' interests always come first. mr. cummings: our clients' interests always come first. if that were truly their goal they would have put out that information and they seemed to
be saying, well, you know, maybe it a little bit teeny unethical but we did not have a duty. and when you have a slogan like, our clients' interests always come first, it seems to me that you would operate on the highest level of integrity, transparency, clarity and accountability. end of case. but that's not what happened here. and so we have got to -- you are absolutely right. we have got to make sure that we shine some light on the system, that we have the kind of reform that we -- that we are trying to get through here, and i know that there are people who are saying, well, you know, maybe too much is being done. let's -- and i just want to take one more minute to talk about that. it seems to me if you want people to invest in something you want to believe -- you want them to understand and believe that it's not rigged before
they get there. i don't know how many people -- and that's basically what you are talking about. how many people are going to go into a card game believing it's rigged before they got there? i mean, they are not going to do it. the odds are against them big time. they are not going to do it. all i'm saying is this would be good, this shining of the light, this transparency would be good for the market, for wall street. americans would feel comfortable and others would feel comfortable investing in wall street and, therefore, in the end, in the end we have a solid, strong wall street that people feel comfortable about investing their hard-earned money. again, i thank to the gentlelady and i yield to the gentlelady. ms. speier: i thank the gentleman from maryland who has been passionate about trying to get to the bottom of a.i.g. i think it's important to point out, and this may curl the hair on the top of your head, my
dear friend, that on top of everything else, you know, goldman sachs' directors, the c.e.o., mr. blankfein, all have insurance for any omissions or conduct that they may become the subject of any inquiry for, if they commit any civil fraud, they have insurance for that. and you won't be surprised, probably, to know who their insurance is with. mr. cummings: please don't tell me. ms. speier: none other than a.i.g. and who owns a.i.g. today but the american people. mr. cummings: the american people. ms. speier: the american taxpayers. mr. cummings: to the tune of $180 billion. ms. speier: that's concerning. just like the synthetic c.d.o., known as abacus, it appears that mr. blankfein and goldman sachs also sold to a.i.g., more the c.d.o.'s that were rigged.
mr. cummings: and that's, again, you make the case for why we have reform. and we'd have to have reform and act on this with the urgency of now because every moment that goes by i'm afraid there will be another goldman sachs deal and others. by the way, others are watching all of this in the market. and there may be others doing the same things. ms. speier: oh, clearly. mr. cummings: so the urgency is now. we have to act on this now. and i'm hoping that will happen. we've done our part. now we have to wait father our brothers and sisters on the -- now we have to wait for our brothers and sisters on the other side to do it as well. we just cannot continue to wait. ms. speier: i thank the gentleman. mr. cummings: i thank the gentlelady for yielding. ms. speier: i'd like to invite my good friend from the state of new york, congressman hinchey, to engage. mr. hinchey: well, thank you very much. i want to express to you my
appreciation that you engaged in in initiating this discussion here. and it's something that's very important, something that needs attention and it certainly needs relief. as i think we all know we are facing, involved in one of the most serious economic crisis in the history of this country. we haven't had an economic downturn as serious at this one since the great depression which happened in 1929 and ran through the 1930's. and one of the most interesting things about the way in which this economic recession has come about and continues is the failure -- in fact in many ways the refusal of responsible people to understand what happened back in the 1930's and the relationship between what's happening now. the kinds of circumstances that caused that great depression similar to the circumstances that are causing this deep recession that we are
experiencing now. and it's only a recession because we have social security now which went into place after the depression in the 1930's as a means to sort of fight against that depression. and a number of other things which were engaged in to try to deal with it effectively. there are a lot of people who are trying to eliminate some of those effective things. in fact, we had a president who recently came in and said we should privatize social security. i think we could imagine what might have happened if we privatized social security and how much worse this economic recession would be today if the economic -- if the social security system had been privatized and then certainly would have been lost. so this is a serious issue and it's an issue that needs financial regulatory reform. and that need for financial regulatory reform has never been more evident for us in the context of our lives and
especially our experience here in this congress. we are still feeling the affects of that meltdown which began in 2007 and then hit hard in 2008 on wall street. and now two years after that 2008 meltdown we still have record unemployment with roughly 15 million americans currently out of work. obviously much needs to be done to deal with this and correct it. wall street recovered rather quickly, interestingly enough, while the jobs and housing market remain in life support. it seems that wall street was able to recover quickly because it knew the housing bubble was on the verge of bursting and hedged their bets appropriately. and they knew that housing bubble was on the verge of bursting because of the subprime mortgages that they manipulated into the context of investing operations. they knew what they had done and
they knew what was happening as a result of what they had done. as we all know, the securities and exchange commission recently made claims that goldman purposefully created an investment, a collateralized debt obligation called a bachus 2007 ac-1 that was designed to fail. the s.e.c. suspects that a goldman sachs employee and probably not just one told sax employees purposefully -- sacks purposefully misled -- sachs employees purposefully misled clients. i have signed my name onto two letters that are aimed at expanding the investigation of goldman sachs. one of those letters is to the securities and exchange commission chair and the other to attorney generic holder.
goldman sachs deserves -- attorney general eric holder. we need to keep in -- -- in mind that they are not solely to blame. throughout the 1990's there was unprecedented deregulation of the banking sector which set the stage for wall street to run amok. safeguards put in place in the 1930's to deal with that great depression were thrown out and that is just fascinating, how intentionally that was done. safeguards put in place in the 1930's, thrown out and unraveled by both congress and the federal reserve. as they let this happen some of us tried to stop the deregulation. but we were in the minority. we should not delay in getting commonsense reforms passed that
will increase consumer protections, regulate hedge funds and the derivatives market and let us not forget to include a stronger vocal rule. the vocal rule, interestingly enough, puts an end to an investment bank's ability to conduct proprietary trading with their bank deposits. this proposal also prevents bank holding companies from housing hedge funds or private equity branches. the overarching goal is very similar to what i tried to achieve when i submitted a glass-steegle amendment to the house financial regulatory reform bill. restoring the glass-steegle act, which of course was passed back in the context of the great depression, would put back in place the clean division between commercial and investment banking that was first established in that banking act
back in 1933. the original bill was put in place as a response to the great depression and resulted in decades of economic stability and prosperity. throughout the 1990's the banking lobby worked hard to undermine the glass-steegle act and it was ultimately overturned . ms. speier: would the gentleman yield? mr. hinchey: yes. ms. speier: you make the case for this great poster that shows the cracks in wall street. and back in 1996 the federal reserve reinterpreted the grass-steel act several times at the behest of wall street. eventually allowing bank holding companies to earn up to 25% of their revenues in investment banking. but you know what? that wasn't enough for them. they then came back in 1999 and repealed the glass-steagall act that worked for over 60 years in this country, brought about, as you pointed out, because of the
great depression that created those firewalls between investment banking and commercial banks. and then in 2002, what was the next -- 2000, what was the next thing that happened? the next thing that happened in 2000, when the commodities future trading commissioner chairman said, we should regulate derivatives and our friends in the white house and around basically said, oh, no, we can't. we passed a law that basically prevented congress from regulating derivatives. and those derivatives are the things we're talking about today. these credit default swaps that brought a.i.g. down, these collateralized debt obligations, synthetic or otherwise, that have brought the entire financial services industry down, and as you can see, the other cracks, the regulation that was created in 2004 that took away the leverage cap of 12
-1. where were they leveraged at? 30-1. then in 2005, a very interesting rule that basically exempted stock brokers from the investment advisors act. you know why? because they didn't want to have a fiduciary duty to their clients. they only wanted to have a duty to themselves. i yield back. mr. hinchey: that is exactly right and i very much appreciate your putting that forum up there. cracks in wall street. a very interesting presentation. and very accurate presentation of the set of circumstances that were put into play over that period of time beginning in 1996 with this congress here, trying to manipulate this situation. i remember how many of us fought against those things, we fought against them, we voted against
them, and of course we voted against that elimination of that glass-steagall act because we understood very clearly that the elimination of investments by allowing investment banks to work closely together with commercial banks and take issues like mortgages and manipulate the mortgages into subprime mortgages and sell mortgages to people who were not able to afford them and to continue to manipulate that mortgage system and to include that mortgage system into large investment packages and those large investment packages which were weak and really deserved -- didn't deserve nearly the kind of attention or the funding that they received were successful based upon, largely based upon at least, the fact it they had mortgages within them. and people had the idea that, well, mortgages are secure. anyone who has a mortgage is going to pay that mortgage off. hardly anybody misses their mortgage payment.
and it was the intentional manipulation of the mortgages in those investments which led to a great extent the collapse of this economy and the collapse that we're experiencing now. and all of the difficult circumstances we have to deal with. now, a lot of these things need to be addressed. some of them have been addressed in the context of legislation that we have passed. the senate is now struggling with that legislation, trying to pass something similar to it so that we can agree on something that is going to begin to modify this dire situation that we're dealing with. but the fact of the matter is, there is more that we're going to have to do. not just the situations that are pending right at this moment, even though they are critically important and they need to be dealt with and completed, there are more that needs to be done. and what needs to be done including other things is the prevention in the future of the manipulation of mortgages.
and the other kind of investment manipulation that took place in the context of this molding together of commercial and investment banking. we need honest banking in this country. we have had it for most of the time and most of the bankers in this country are honest and strong and safe and secure and working in the best interest of the people in their community. but there are exceptions to that. and those exceptions can be deep and dire and we've seen the results of it in the context of this economic situation that we are dealing with now. it needs to be corrected and i deeply appreciate you for bringing this subject up in this way and for bringing attention to the issues that you are present -- have presented in the context there next to you. so, thank you very much, it's a great pleasure to be with you in this context and i sure hope that the opponents of this bill in the senate are going to get the kind of pressure that they need from sensible places and
sensible people, conscientious people to make sure that they stop blocking it. we need to get these things passed. thanks very much. ms. speier: i thank the gentleman from new york for his well-placed comments and his recommendations to our colleagues in the other house. i now have the great pleasure of joining in colloquy with my good friend from the state of ohio, the great, passionate marcy capture. ms. kaptur: i thank you very much for spearheading this effort this evening and for the incredible work that you do for this house and for our country and your superior knowledge of the financial markets and the banking industry. america really needs you now more than ever and i thank your constituents for electing you here. you are the right person at the right time and the right place. ms. speier: i thank the gentlelady. ms. kaptur: it's a pleasure to
join you tonight to place information on the record related to goldman's behavior as well as other institutions that have caused our country so much harm and as others have mentioned, on april 16 the securities and exchange commission announced that it was filing a civil lawsuit at long last against the big speculator goldman sachs and accusing it of committing fraud. but it was a civil filing. we know that what happened on wall street in the financial markets, the commodities markets and then the housing markets led to enormous financial turmoil in our country and ultimately this great economic crisis that we are facing and the american people want answers, they want to know who did what and they ultimately want justice. a few days after that filing, over five dozens of our colleagues signed onto a bipartisan letter sent to the attorney general on april 23 and our letter called upon the
secretary -- called upon the attorney general to begin criminal investigations and prosecution. one of our concerns continues to be that if in fact a civil case is filed by the s.e.c., could it be possible down the road that some of that evidence could be inadmissible in the event there is a criminal proceeding? and so we urged attorney general holder to proceed quickly and today we delivered, in addition to that letter, signatures from over 140,000 americans who have been signing up on an epetition to the attorney general urging the same. we thank the organization's progressive change campaign committee and moveon.org for learning citizens across this country that they don't have to be neutral in this fight, they can let their views be known to the attorney general of our country about the importance of criminal proceedings. what makes that so important is
the fact that the attorney general's office and the department of justice has been understaffed throughout the last 10 years, unable to do the kinds -- type of financial crimes investigations that are necessary. back in the savings and loan crisis at the end of the 1990's and early 2000's, or i should say at the end of 1989 up into the early 1990's we had over 1,000 investigators in financial fraud at the department of justice. after 9/11 that was reduced to about 75. and therefore we were totally unequipped at the justice department to deal with a lot of the wrongdoing that was -- wrong doing that was proceeding through those years and those decades -- wrongdoing through those years and those decades. i have a bill to increase the number of investigators and quite frankly i have a deep concern about some of the self-serving individuals that may have been representing private interests are a rather than the public interest --
rather than the public interest as they were conducting their business through goldman sachs and other firms and i would like to place on the record, for example to, the following and then i will yield back any additional time. joshua bolten who was president bush's chief of staff in the white house at the time that the markets melted down had actually been the person who ran goldman sachs' london office and yet then he came to be president bush's budget officer, chief budget officer and then went to be chief of staff at the white house. it's a key moment when decisions had to be made about how to handle the financial markets. in the current administration, it's no secret that the chief of staff to the current secretary of treasury, whose name happens to be mark patterson, had come directly from goldman as its top lobbyist, and neal kashkari had come from goldman. i think this goes far beyond
party, it has to do with america and standing up as patriots for this country and asking the question, isn't that too much insider dealing? how do you know their represent their clients' interests or the public interest when they are involved on the private side and public side like a very fast revolving door. i will also place on the record tonight the fact that since the crisis started, the six institutions in addition to goldman that include city bank and wells fargo, hsbc, morgan stanley, all these big banks now control 2/3 of the deposits and g.d.p. of this country. six institutions, they're raiding equity out of our local communities, they're too powerful and too irresponsible. they're not doing loan workouts in places where i come from and i want to thank the gentlelady for calling into question their business principles you have so ably put on the floor here as to who their interests really
are, and that's my bottom line question. who do these people represent? they seem to be getting bonuses at extraordinary levels in the billions of dollars, when people in my district have fallen off unemployment benefits, companies like j.p. morgan chase don't return phone calls to do loan workouts, wells fargo, they're just totally irresponsible. they have too much power and they are thumbing their nose at the american people at a time when our people are just hanging on and i want to thank the gentlelady for holding the special order this evening, for giving us a chance to place some of this on the record and i ask unanimous consent that we be able to place on the record the letter we sent to the attorney general asking for criminal proceedings and also the names of the members of congress who signed on to this letter and we urge other colleagues who wish to join us to give us a call. i yield back time and i thank you so very much for allowing me to place this information on the record.
ms. speier: i thank the gentlelady from ohio. you reference the number of people in the justice department tasked with doing the investigations. it was interesting this week when we had the hearing on lehman brothers and mary shapiro spoke to their ability to do their job when they had only 24 staff members in that specific division to do investigations of all of the wall street firms. if you ill-equip the very agencies to do the job they won't be able to do the job. between 2003 and 2007, under the president bush administration with christopher cox as head of the s.e.c., you will not be surprised to know, there was an 80% reduction in enforcement actions at the s.e.c. and 60% reduction in disgorgement actions at the
s.e.c. no surprise that we had an s.e.c. that was ill-equipped but also had a different perspective. it was not there to necessarily protect the american people, but to allow business to flourish. and the business that flourished was much like what goldman sachs was doing, where they actually put a.i.g. in some of these synthetic collateralized debt obligations they knew were going to fail, lehman brothers where goldman sachs shorted lehman brothers and helped make sure it did come down. it was reportedly in many of the emails at goldman sachs by their employees when they were communicating with some of their clients that they said they were no longer going to support or back up bear stearns then all of a sudden bear stearns went down. we now have china suing goldman over bad derivative deal, we have germany, france and the u.k., god nose, what did they
-- "godfather of the kremlin" knows what did they do with -- god knows, what did they do with greece as ta way to take some off their balance sheets to get support from the e.u. and in the course of doing so, hid much of the debt and now we all know what's happened to grease. we -- to greece. we know what happened to the stock market just yesterday of the rating agencies taking the steps they did. this company has no shame. this company is willing to do any deal as long as it makes them money. ms. kaptur: will the gentlelady yield? ms. speier: i will. ms. kaptur: do you know what the boe nutses were for goldman sachs? ms. speier: i yield to the
gentleman from oregon. mr. defazio: it was $9 million, most americans would be happy to have that salary for a fraction of a week. ms. kaptur: i think he thought it was too little. mr. defazio: compared to the enormous wealth he created by shorting and manipulating and, you know, synthesizing. the one thing that i would reflect on and i think the gentlelady has more experience with this than me, i was puzzled yesterday when i kept hearing him say, we are the market makers. we're the market makers. we're the market makers. after a while, i started thinking, bookmakers, market makers, is there a difference? what's the difference when they're not dealing in reality
or productive investment, they're dealing in manipulated investment, actually products designed to fail. we have too big to fail institutions who create products designed to fail and they profit immensely by doing that. what's this about? that's market making? ms. speier: would the gentleman yield? the hardest thing to try to explain to the american people is what is an -- what is a synthetic c.d.o. i've been scratching my head trying to think of what it would be like. this may not be a good analogy but i offer it up. it would be like a doctor going in and doing open heart surgery, knowing his patient was close to death anyway, then taking out a life insurance policy on that patient because he was clearly going to win each way. ms. kaptur: would the gentlelady yield? ms. speier: i do. ms. kaptur: excellent analogy. they created rules by which
only they can win that doesn't seem to me to be the spirit of free enterprise. they created so much collateral damage, it brought down the economy of our whole country. they use the argument, if we didn't have the tarp, things would have really gone wrong. i thought, how could it be worse? how could it be worse than this? is what they did with the tarp just bailing themselves out? because they certainly haven't done anything for the american people. they've thrown all the bills of all their mistakes on fannie mae, freddie mac, f.h.a., all thele instrumentalities that govern the united states for decades to come they didn't take any losses on those themselves. they were enriched by the taxpayers of the united states who lifted them right up, and they're not dealing with the damage across this country where foreclosures continue to go up. i wanted to make sure that i placed on the record the names of the six companies that now
hold 2/3 of the wealth of this nation, and they are goldman sachs, morgan stanley, j.p. morgan chase, citigroup, bank of america, and wells fargo. they have enriched themselves handsomely. they doubled their importance since the beginning of this crisis while quashing community banks across this country, seeing forced mergers and institutions like p.n.c. bought up as local community banks that didn't do anything wrong and were not permitted to do this kind of wild-eyed business deal found themselves having to pay huge fdic fees and the net yield of all of this is, the big ones got bigger and the american people are continuing to be kick out of their homes and these institutions won't return phone calls and they have hold of the auction process and their investment intermediaries are holding the
equity and the ownership in these properties. how is that good for this country? ms. speier: i thank the gentlelady from ohio. it's important to make the point that goldman sachs has never loaned a dime, has never offered a loan to americans trying to have a house. they've never been a commercial bank as we know them. and yet, they've had the luxury of being at the discount window, getting the money cheap , even though they have not been a commercial bank as we know a commercial bank to be. all they've done is bet on how to rig these various mortgage-backed securities and make a truckload of money on them. ms. kaptur: you know what amazed me, when you go out our back door, sometimes you see chipmunks in my part of the country, tearing across the concrete, going so fast. the minute they got in trouble
they came under the umbrella of the bank holding company act, so they could not be a speculator anymore, they're a legitimate bank, even though they're trafficking in all those securities, they were like those little chipmunk they ran -- they hid themselves right under the bank holding company act. i don't agree with what was done but it's what -- they took good care of themselves. >> will the gentlelady yields? -- gentlelady yield? ms. speier: i yield to my good friend from rhode island, mr. langevin. mr. langevin: i thank the gentlelady for yielding and i want to echo the concerns and words of my colleagues who have spoke onen -- on this issue of financial reform and the outrageous financial business practices that have been taking place on wall street. i'm angry, as you are, and i certainly want to thank you for the opportunity to express myself for the strong support for the work done to crack down on wall street to prevent another near economic collapse
from endangering our financial system and indeed, american families. i was certainly proud to vote for the wall street reform and consumer protection act this past december. i look forward to voting for its final passage into law this year. in my home state of rhode island, we are still feeling the repercussions of the great recession, with an unemployment rate of 12.6%, we're tie nerd third highest unemployment rate in the nation. i'm angry, i'm angry that while wall street banks were propped up with taxpayer funds last year, our small businesses on main street are struggling to keep their doors open. american families are struggling to keep their homes. and they're still asking where is their assistance because it hasn't been enough. now over the past few years, i, like many rhode islanders, have been angered by the greed exhibited by wall street and other companies that took advantage of their investors, preyed on our constituents, and rewarded executives with
outrageous pay packages. this week we heard goldman sachs executives testify before the senate that their -- they're not to blame for the bad investment deals that were based on the mortgage market and added to its collapse. this testimony is a slap in the face to hardworking americans, small business owners, and everyone else who played by the rules only to find themselves devastated by the economic downturn. it should convince every member of this body to prioritize legislation that puts consumers first and demands accountability from our institutions. the speaker pro tempore: the gentlelady's time has expired. ms. speier: i thank the gentleman. i recognize we could have spoken for two hours and we will continue this the speaker pro tempore: under the speaker's announced policy of january 6, 2009, the chair recognizes the gentleman from iowa, mr. king, for 60 minutes.
mr. king: thank you, mr. speaker. i listened with interest to the presentations made here in the previous hour and a couple of visuals there on the poster, something i want to take a good look at and commit some of that to memory. i heard from ms. kaptur that this is not a partisan issue, it's an economic issue and an american issue and i agree. i have been troubled for some time about not just the influence that comes out of goldman sachs but the influence out of wall street that seems to -- here's my concern and here's how it was internalized. i live much of my life watching from a distance what was going on on wall street. i believe that as those investors and bankers sat down there and began to trade on the streets of wall street and began to build the edifices that exist there today, so very close to ground zero, that they were the keepers of the free enterprise flame in america. i had great trust that they were the ones that understood
from the top down, from the multiple billions of dollars of investments down, how to hold together free enterprise, how to plan for the long-term, how to put provisions in place so each generation could have that opportunity to do free enterprise capitalism and free market capitalism. i got my first wide-opened eyes when i first went to wall street when i was elected to congress, fairly early in 2003, for me. and it's a long story, but the short version of it was, after i went around wall street and met with a lot of the c.e.o.'s and the players that were there, on the way back, i turned to my wife and i said, marilyn they don't have a vision for the long term. they don't have a plan in place to protect our investments and see to it that this doesn't collapse. they're looking at the short term, they're looking at taking their margins out and looking at their quarterly reports but they're not looking at where we are in 10 years or a generation or 50 years or 100. that was well before we saw
anything except a dot com bubble that was at the time being filled by an unnatural housing market that was partially fueled by unnaturally low interest rates. that was my vision then. as i watched this unfold, i reflect upon an individual we brought in as an expert, and since i'm going to quote him on the floor ypt to say the name, but it was 30 years of investment banking, in the beginning of the subprime mortgage crisis, as the guy dialogue was beginning in the country and he explained it this way. when you're in this investment banking business what you do is, these an expert, what you do is pretty much what everybody else does, that way if they're making money, you're making money and if things fall apart and they get bailed out, you'll be bailed out with them. that was more than three years ago. that's another incident branded into my memory because it was a seminal moment in my understanding that the economy that most of us deal with as
individuals balancing our checkbook, paying our credit card bills, looking at the income that comes in weekly or monthly and budgeting our expenses and knowing that there are checks and balances in everything we do, if we fail to make our house payment, somebody comes and sells our hughes. . they said we are going to tax somebody and fund that. we have to be responsible. we have to guarantee those payments and get a line of credit at the bank so we can make monthly bills and meet the payroll and the utilities and all of the things that come along with free enterprise side of this and i looked at wall street and i found out that they had a different set of rules, a different way of looking at this, that the check and balances were not built in so there was an assurance that the built-in component that is a check and balance that would
require that the people who would make the overinvestments and take the excessive risks would pay the price for that. as we get to this point as we see the downward spiral in our economy, this great recession as some would call it and the massive bailouts and the tremendous burden on the taxpayers born and unborn to have this obligation to pay the interest and principal on this debt, the guarantee is there. it's now nearly explicit with this legislation. we may or may not agree with how we go forward, but i think we can agree that the things we have done in the past have not had enough checks and balances internally. i didn't come to the floor to speak about this subject but i wanted to speak about this to let you know and everyone know that we have a common cause to put responsibility in government, responsibility in
the market system. as i watched the gentlelady pay attention, i would yield. ms. kaptur: i want to thank congressman king for coming to the floor because we share a concern that goes beyond party. this is so serious for our country and serious to the next generation. if we look at the abuses of the financial system, every time something bad happens, the government bailed them out. and then the next crisis was worse than the one before it. i came here during the 1980's. i saw what happened and i saw a huge debt put on the american people, $140 billion and rather than strengthening the laws. if you look at enron and everything that looked back during the 1990's, rather than repairing it, what we did was, we gave them more latitude.
it is inexplicable what occurred and the moral hazard got greater. and now with this, this is so much larger than the last two crises and it's a real question as to whether the reform coming out of the congress will actually work. i would like to place on the record an interview with professor william black, an attorney, who was recently on television, who i think is very, very probing about financial fraud, control fraud and lack of investigators inside the f.b.i. and as the congresswoman mentioned, inside the s.e.c. and interview with have simon johnson of m.i.t. about what is actually happening in this crisis and how we are not addressing it in the reform bills proceeding through this congress.
i appreciate you giving me the opportunity to say that and say we are in common cause here i appreciate your comments very much. i see community banks being destroyed in my region and these institutions that have been prone to moral hazard and the amount of money they give to political campaigns. and with the recent support, decision by the supreme court to allow endless funding by any group in our political campaigns. any one of them could wipe us out. that's not what this country was set up for. we were set up for opportunity and the individual to matter, for our communities to matter, for the equity that our people when they created in their homes, that they don't lose it because they think of how to raid them. we have an enormous obligation to educate the american people and learn from them and hear their best visas to how to dig
out of this hole. mr. king: reclaiming my time. it is unusual for democrats and republicans to share time on the floor but because there is a bond in common interest and a bond of a serious legislator that i recognize. and also, mr. speaker, i believe the gentlelady has asked unanimous consent to introduce documents into the record and i would hope that that would be so ordered. the speaker pro tempore: without objection. mr. king: i thank the gentlelady from ohio for her presentation and i'm going to shift off now into the subject matters that i had in the front of my mind. but i was compelled to address this and appreciate the response. mr. speaker, i come here to the floor to talk about a range of issues and if i would pick up on the theme of the financial side of this and go through a list of some of the things that happened that contributed to the great recession that some referred to
and i would take us back a long ways and clear back to the time that there became implicit guarantees that the federal government would do bailouts. i remember those years in the 1980's. i was involved -- i went through 28 years of business and i was highly leveraged going into the farm crisis of the 1980's. i lived 3 1/2 years with the knot in my stomach that didn't go away unless there was something distracting. and then it was form again -- mr. speaker -- the speaker pro tempore: the gentleman will suspend for a moment. for what purpose does the gentleman from new york rise? mr. arcuri: i send to the desk a privileged report from the committee on rules for filing under the rule. the speaker pro tempore: the clerk will report the title. the clerk: report to accompany house resolution 1305, resolution providing for consideration of the bill h.r. 2499 to provide for a federally sanctioned self-determination
process for the people of puerto rico. the speaker pro tempore: referred to the house calendar and ordered printed. mr. arcuri: thank you, mr. speaker and thank the gentleman for yielding. the speaker pro tempore: the gentleman may resume. mr. king: always happen to yield when the rules committee is conducting business here on the floor. so i will go back to the beginning, mr. speaker. and that is this. that if we would go to 1978 -- and i want to illustrate the chronology of how we got to where we are today financially. excuse me, mr. speaker, i will take it back further. let's go back to october of 1929 when the stock market crashed and launched the great depression rather than the great recession and saw the downward spiral in the dow jones stock exchange and others not registered on the dow at the time as part of the dow jones industrial average and americans
lost he can quit. some jumped out of windows. but that crash in the zock market dropped. it went up and went down and always been a sawtooth. we went through the 1930's and saw roosevelt being elected in 1932 and actually prior to that, but certainly accelerate frd that point, he borrowed money and spent money and created make-work projects and put the united states in debt never envisioned by the founding fathers. even his own people got nervous with the amount of money he spent. his treasurer expressed the concern that we spent all this money and what do we have to show for it. unemployment is still high and the economy still hasn't recovered and lumbered through the 1930's with marginal improvement in the economy. and one has to question whether it would have recovered if it
had not been for world war ii. the current president has made the remark that world war ii was the largest stimulus plan ever. he can make that statement, i don't take issue with the point he's making, mr. speaker. but i would make this point, from october of 1929, we saw all of the spending in the new deal era of the great depression throughout the 1930's. and the borrowed money that went into winning world war ii. president roosevelt was an outstanding wartime leader for the second part of the world war, not a social or economic leader, but he did hold us together as a nation and provided that clear voice and leadership that was so important during that period of time and he stood on the ground of unconditional surrender. i tip my hat to that contribution of history to that man. however, by the end of world war ii, we had not recovered
economically from where we were in 1929. and by the beginning of the korean war -- by the beginning of the cold war in 1948, as was illustrated by churchill, we had not recovered from the great depression. from the beginning of the korean war, we had not recovered and by the end, we still had not yet recovered from the great depression. if you measure it as the dow jones industrial average recovering back to the place where it was in october of 1929, that happened, mr. speaker, nine years after franklin roosevelt had passed away. 1954 when the stock market got back to where it was in october of 1929. all of those years. and i'll argue, mr. speaker. that overspending by government, the interest and the principal delays the recovery. it may diminish the depths to which we might have otherwise
fallen but delays the recovery. it's the same in a business. if you are a small business and grossing $500,000 a year in meeting a payroll and all the bills that i talked about earlier and you have a flood that wipes out your asset base and then along comes fema and if you're in business, they aren't going to give you a grant. they might help you get an s.b.a. loan. it might be a preferable interest rate. let's say your debt was $100,000 and grossing $500,000 and meeting a payroll of $250,000 a year. now it takes another $400,000 to put all the pieces back in your business and you're able to borrow that money at 4% or 5% or 6%. now you have the interest rate on the $400,000 and the requirement to pay the principal off on that $400,000 and takes all of that money you are spending now as a result of the
overleveraging that may be necessary to keep you in business is money that's earned, money that you had to earn, you would have earned it anyway, that money goes to interest and principal rather than capital and that creates jobs. you can't service the debt any longer. at a certain point the business can't pay the interest or principal and become insolvent if the debt and the leverage is too high. that's true for a family that runs their credit card bills too much and can't service the minimum payment payment on their credit cards and true also for a small business. true for a large business. and mr. speaker, it's true for a government. it's true for a small government like greece. it's true for a large government like the united states of america. and at some point, this debt that we have taken on here in this time in this era, at some point it becomes too great for even the most robust economy in
the world to overcome to service and pay the interest and principal on that debt. mr. speaker, that's where i think we are headed and may be there, but that's the fear they had during the 1930's and that is something that may have restrained roosevelt in his spending where we were able to recover from it, although it took a long, long time. from 1929 until 1954, until nine years after the second world war was over and nine years after franklin roosevelt past away. we carried this burden throughout that time. there was fun with dick and jane, which is the life i grew up in. we were response i will for our budgets. the people that were coming into adulthood had cut their economic teeth on fiscal responsibility, because they had pinched pennies and made it through the great depression and fought and won
the world war and then the war in korea was a negotiated settlement in the end, these were a frugal, hardened people in my part of the country of pioneers that came across the prarie in a covered wagon, not riding in the wagon, to live free or die on the prarie. these are hard-working, entrepreneurial, spirited, strong, faith, family people that took advantage to be here legally in america and build lives for themselves and build foundations for their children and grandchildren. these are people in the 1950's. as we watched the baby boomer generation blossom with a component of the generation which was referred to as the flour children who didn't take that responsibility -- flower children who didn't that responsibility, began to push that irresponsibility.
by 1978, the class envy component got high enough. the lending institutions were redlining neighborhoods and they would look at the inner cities in america that were losing asset value. if you owned an apartment, a condo, or a house, or a piece of industrial or commercial property in an inner city that was being run down, the value of the real estate was diminished sometimes by the crime rates that were there, by the abuse of drugs, by the businesses that weren't sustaining their value and cash flow. so you might have a nice home sitting in a neighborhood that's not as nice as it used to be and even if you keep your home up, people don't want to move in, so the value is going down. bankers were doing what's called red lining. they'd draw a line around this neighborhood this area in the
city and make a determination they were no longer going to lend money on real estate into those neighborhoods or commercial-industrial property areas being run down. it may well have been a prudent business decision. it was defined as a racist decision and in some cases i think it probably was. but this congress passed legislation called the community reinvestment act. it compelled lenders to make bad loans in bad neighborhoods. that was 1978. akorn was formed and shaped around that same period of time. as this moved forward into the 1990's, under the clinton administration, there was a refreshment of the community reinvestment act that set higher standards yet for making more bad loans in bad neighborhoods and they found that fannie mae and freddie mac, stepping into formerly private entities became quasi-government entities were not make, according to the opinion of this democrat majority in congress, enough
bad loans into bad neighborhoods so they changed the standards in the community reinvestment act, they were lobbied by acorn to lower the standards for fannie mae and freddie mac. they low therd standards for fannie mae and freddie mac for the secondary loan market so more lenders could make more bad loans in bad neighborhoods and peddle them into the secondary loan market of fannie mae and freddie mac. now we're into the 1990's and still it wasn't such a crisis until such time as the dot com bubble burst. the dot com bubble burst was initiated by lawsuits against microsoft joined by several state attorneys general, including my state attorney general, tom miller. i think that he and others wielded the lance that pierced the dot com bubble when they filed the lawsuits, the class action lawsuit against bill gates' operation and microsoft.
even though i believe that bubble was swelling and would have burst at some point, i think the lance that was wielded was by those state attorneys general that brought about the dot com bubble bursting. in the area -- in the aftermath of the bursting of the dot com bubble, we had, i'll say, a mini recession. alan greenspan saw that mini recession and decided, this is my interpretation of his actions, certainly, mr. speaker, subject to rebuttal by alan greenspan or somebody else that may have knowledge i'm not privy too, -- privy, but set about a policy here in the united states to unnaturally lower the interest rates so people could buy homes to drive the housing market, partially to compensate for the bursting of the dot com bubble. we had more homes built than before, higher demand because of the lower interest rates and lower underwriting standards
made to fannie mae and freddie mac as far as secondary mortgages were concerned. the lenders were pushed by acorn who found themselves brokering home loans and approving the conduct of the lenders as to whether they were complying with the community reinvestment act. we have a political organization that's turned out to be a corrupt criminal enterprise promoting bad loans in bad neighborhoods at unnaturally low interest rates, driving up a false economy in the housing market to presumably to some degree compensate for the bursting of the dot com bubble that was brought about by the suits of the state attorneys general, including my state attorney general, tom miller, all of that going on while we get hit by the september 11 attack on our financial centers and the ensuing extra costs involved and the tremendous loss in life and in treasure that took place out of all of that. and what do we see happening here? we have seen now an economic
crisis that has been perhaps averted, but maybe would have been better if we'd simp aly -- simply allowed some of those businesses that were too big to fail, to fail, reorganize them, put them through the process and get them back into the system again. in the end, we would have reestablished the principle that you cannot have too big to fail unless you're going to have government guarantee and now the government guarantee on fannie and freddie is $5.5 trillion on contingent liabilities, all this has taken place and moved us away from the standards of free enterprise and accountability. i would be happy to yield such time as she may consume to the gentlelady from minnesota who is on the financial services committee and extremely knowledgeable about this and any summit she might choose to change it. to mrs. bachmann: i thank the gentleman from iowa for laying out the history of where we are
at today in terms of the financial problems and really the concerns i have about the bill being debated on the senate side right now is that that bill wants to institutionalize the very bad government interventionist policies that got us to the point we're at. here's a couple of things this bill will do, over on the senate side. number one, it makes bailouts permanent, as though we had bailout 1.0, which no one yale liked, it was a $700 billion bailout, i know congressman king and myself voted against the original $700 billion bailout. but it would institutionalize bailouts and here's something not generally known. with the first bailout, the president, it was under president bush, unfortunately, that the first bailout was passed. the president had to come to congress and ask us for our permission for the $700 billion fund to be create. remember this never had happened in the history of the
united states. whereby the secretary of the treasury was given a blank check for $700 billion. the treasury secretary virtually was able to do whatever he wanted to do with that $700 billion, effectively, no oversight from congress, he got a blank check for $700 billion. i could not g in good conscience give that kind of money to one single individual because you know if you give that sum of money, which had never been before given to any individual in american history you know there's going to be waste, you know there's going to be fraud, you know there's going to be abuse. that's something that government tends to do when i it spends too much money system of of course, that's what we saw. we saw money went all over the place and we still don't have a full accounting on where all the tarp money is but what did that money fund? think of it.
that money allowed the united states to purchase the largest banks in this country and the united states federal government still owns those private banks. city bank, bank of america, that money also athroid federal government to buy a.i.g., the largest insurance company in america. barack obama, who is now our president, was elected in november of 2008. shortly after his election, he went to then-president george bush and said, president bush, i would like to have something under $20 billion, i want to set up an automobile task force because if we don't spend money now, chrysler and g.m. could fail and to prevent their failure and to prevent job loss we need to have an automobile task force fund. so president bush was on his way out the door, ending his presidency, president obama was about to begin his he gave that amount of money over to president obama and his team to
set up the automobile task force and we all know what happened. the automobile task force was set up, literally billions of dollars were pumped into chrysler and g.m., and what happened? chrysler filed bankruptcy. g.m. filed bankruptcy. in fact, it was so bad that g.m. stock was taken off of the dow jones -- off of the new york stock exchange because the value of their stock plummeted so far. contrary to what president obama said that he would be able to save the car companies with this bailout fund, the car companies went under. they failed. as a matter of fact, president obama then decided, i don't know where he got the power from, but he decided to fire the head of g.m. out of what power, no one knows. but here he is, president of the united states, deciding that a c.e.o. of a company is going to be fired?
that's a jurisdictional issue. the president of the united states does not have the power to fire anyone in the private sector. but isn't it amazing what a whole lot of money will do for a person. that money put so much power into one man's hands that he was able to do virtually anything he wanted, including overturning about 150 years of bankruptcy law. how is that? because chrysler bondholders, those are the people who invested money into the chrysler car company, the bondholders had an investment. it's like they put -- let's say you put $100 into a company that your friend holds. that's your money you put in. then che company gives you a bond. it says, hey if anything happens to our company, we'll make sure your $100 is paid back first before anyone else
and we'll pay you back all of your $100. unfortunately, president obama and his team decided to turn upside down 150 years of bankruptcy law and so what they did is they said, you bondholders that have a secured interest in your investment, you're no longer getting your secured investment. we're taking your money and we're giving it to well-connected people, politically that we want to make sure get that money. in that case, it was their friends at the u.a.w., at the union. mr. king: will the gentlelady yield? mrs. bachmann: yes. mr. king: i wanted to explore the secured creditors so that the speaker and those that are observing understand clearly what this means. a secured creditor is someone who holds collateral that is a guarantee that's behind the bond so i'm going to ask you to flesh this out a little bit, but i'll say it includes
perhaps real property, the actual factory itself. it could be the equipment inside the factory. could be cash collateral, security, could be the cars sitting in the ready for shipment to the dealers, but not the cars in the dealers' lots, because they own the cars. is that a reasonable picture of what secured collateral is? i yield to the gentlelady. mrs. bachmann: that's right. something else to know, usually secured creditors take a lower interest rate. they get paid back at a lower rate because they are first in line. but what happened when chrysler went under, rather than making the bondholders first they actually had their secured interest taken away from them and other creditors were made whole first. how can you do that? that's an abro are gation of contract law, an abrogation of bankruptcy law. so we saw a violation of law.
that's something that is foundational to the united states that gives us a good business climate. the rule of law is a good thing. the sanctity of contracts works. when we start violating the law and when we start penetrating contracts and violating contracts, that's when we get into trouble with our business climate. we saw that happen in this bailout. so not only did the federal government take money that we don't have, remember, we had to borrow money so this wasn't money we had sitting in a bank vault here in washington, d.c. we opened up the bank vault and pulled out big wads of $700 billion that we could give to the treasury secretary to give out to whatever his favorite private business was or his favorite group was, no, we had to borrow that money from the chinese or whoever we could go and sell our debt to, so who is going to pay that back? that money is going to be paid
back by the debt-paying generation that gets us into a whole other area. you were talking about the financial mess we're in, you were talking about acorn, you're talking about the subprime mortgages, where all of that has gone, freddie and fannie, and i guess the point i'm trying to make is the federal government, with this tarp bailout, ended up taking that money and rather than making our economy whole, rather than creating a job, because remember, president obama said, again, now this is with the stimulus spending, $787 billion worth of stimulus spending, we were promised that we wouldn't see unemployment go above 8% and we were promised he would create 3.5 million jobs. i know my colleague, steve king, knows that rather than creating 3.5 million job we lost 3.5 million jobs. so the spread of error for poth because ma is about seven million jobs. let alone the fact that the
debt-paying generation that will pay back this $787 billion, those today that are age 5 to age 30, that age cohort for the next 45 years of their work history will have to pay back the same amount of money as if they want to the store and bought an ipod for $300. so the 5 to 30-year-olds for the next 45 years of their work life will have to go down to a store, buy an ipod at the end of the month, crush the ipod under they heel and buy another one the next month, crush it, buy one the next month, every month for 45 years of work history, the debt-paying generation in america will have to effectively buy an ipod and crush it and then replace it to equal what will be spent in this stimulus bill. .
that's just one bill. they would love to buy one i-pod but now condemned for 45 years of their life every month going out and buying a new inch pod and giving it over to the -- i-pod and giving it to the federal government. mr. king: this is a presumption that they will stay the price theyr but under current value, current dollars, a child born today, being a natural-born american citizen, their share of the debt is $45,000. sign here with your footprint when you are born, right out of the delivery room, you have to pay the interest and principal on. that same child born today by the time they start fifth grade, their share of the national debt
would be $88,000, that's the difference between the obama and the administration when he took over. balk mrs. bachmann: that's if every american is paying taxes and the debt. one thing we saw from this current filing of income taxes is that 45% of americans paid no taxes. that doesn't mean that 47% of americans are deadbeats because they aren't. many don't pay because they are senior citizens. there are a number of reasons. but the number remains true that 47% of americans aren't payic -- paying the taxes. a larger group is paying the taxes. the debt burden will be especially egregious. mr. king: one of the important studies that was done by the
heritage foundation went in and looked at and it's the level of welfare. he counted 72 different programs that distribute the wealth from taxpayers in america to people who are sometimes taxpayers but more often are tax users. of those programs, even though we brought some of the welfare down, it didn't reduce it so much as it produced a temporary plateau and built up again with a whole series of programs. it's a chilling thing to see a democracy that has become a welfare state. one of the studies was this, there was a look at house holds headed by high-school dropouts, whether they were legal, illegal, natural born americans, whatever their category was,
head of household and the average household of a family of four and high school dropout, they would draw down $32,000 a year in taxes and the whole collection of the been that are there and pay $9,000 in taxes. draw down, $32,000. the net cost to the taxpayer was $22,449. and that's an average. and the average sustained life of that household that was calculated was 50 years. the math comes out $1.5 million to subsidize this household. people are arguing we need to open up our borders and bring in any number of people because the economy needs this labor and we need someone to pay for the social security of the baby boomers. if they are uneducated, even though we have entrepreneurs
that are going to make millions of dollars and create millions of jobs, on average, it is a net cost to the taxpayer of $22,449, $1.5 million for the duration of that household, that is a burden to the taxpayers. and a drain on the economy. and therefore, that's good for those of us who are looking for retirement, members of the baby boom generation, which i am and mrs. bachmann is not, that is my piece here, mr. speaker. mrs. bachmann: could i add, i reserve the balance of my time. earth did a study on welfare and increasing use of welfare in the united states. the trajectory we are on with the growth of welfare is unsustainable and we recall shortly after president obama came into office, one thing he did is rescinded all the welfare reform regulations that were put
into place by the republican congress after they won control in 1994. all of the reforms that got people off of welfare and into working jobs and actually brought -- plateaued the cost of welfare, now all of those restraints have been taken off. we have seen a dramatic increase in welfare spending. it was said that if an individual on the benefits leaves welfare, that that individual would have to seek a job paying in excess of $44,000 a year to replace the welfare benefits that they are receiving from the federal government. that is the level ofen rossity of the welfare benefits that are currently available to people in the united states. there are people in my district that would love to be making an income of $44,000 a year and yet that is what the united states
is providing on average for welfare benefits across the united states. of course, there are exceptions to that, but that's on average. again, i would refer people to the heritage website and the work is by robert rechter. mr. king: i had forgotten that number. $44,000. now if you have all the free time in the world to do whatever it is you want to do and have rent subsidy, heat subsidy and food stamps and earned income tax credit and other programs -- mrs. bachmann: and a home mortgage that is subsidized by the taxpayers because this is part of the problems in the community reinvestment act in the 1990's, an individual could have no job, no income, no assets, no job. and with all of that, you could still get a mortgage just based
on your welfare benefits. this is a complete change in the way mortgages were given out. and welfare is inherptly unstable. to think that a 30-year mortgage is given to someone on the basis of their welfare payments, we had never done that before in the united states. what we saw is a correlation with a very high rate of forecast. what inducement is there for an individual to save up to buy a house, save a down payment, be frugal, do what you need to do to get a good credit score to get into a house, banks were forced to not look at credit scores essentially and give mortgages to people who on the basis of their welfare checks and a lot of these mortgages that were given would give cash back to people and then they took home he canity loans --
equity loans against their homes. no wonder we are in the problem we're in. if you change your banking standards to ones that don't even rank up to a comic strip level of regulations, you're going to get disastrous results and that's what we are living with now. the bill that's going through the senate, it's institutionalizing the worst aspects that there are about government policy that led to the financial meltdown. mr. king: i think it might be useful for the gentlelady to go through the list of things that have happened about the nationalization because if i look at the dialogue in the country, we have carried this dialogue back and forth together and teamed up on it. but the gentlelady has talked about $700 billion in tarp and haven't brought it up so much but the three largest banks were
nationalized with the support of president obama along with a.i.g., the large insurance company, around $180 billion. it's in that area. and then we have seen freddie mac and fannie mae which i did mention earlier and the president by his executive order had swallowed up the balance of the risk and put it on the taxpayers to the tune of $5.5 trillion should freddie mac orr fannie mae should collapse. we watched the takeover of two of our two car companies, and saw the c.e.o. of general motors fired and replaced by -- replaced by the president of the united states. and doesn't deny it. he takes a bow and a smile as if that's what we should be doing.
and looking at c.e.o.'s payroll. student loan program has been taken over by the federal government. we watched the nationalization of our skin with obamacare taken over by the federal government and watching the financial institutions all the way down to the smallest credit transaction, it is a chilling display of the continuing of history of the last 18 months. mrs. bachmann: we have witnessed in the last 18 months is an economic coup. because what you stated, today the federal government owns 50% of all private home mortgages in this country. over 50% of the homes, they aren't owned by the people occupying those homes, but by the federal government. anyone going to secure a mortgage today for a home, nine times out of 10, they have to go to the federal government to get that mortgages. so that number will swell for
the number of homes that are owned by the federal government. according to an economist by arizona state university, if you add up all of those sectors of the private economy, we have gone from 18 months ago, 100% of the private economy, private, now we have over 51% of the private economy effectively directly owned or controlled by the federal government. but president obama isn't done. he is demanding that the federal government effectively control the energy industry. that's another 8% of the economy. and he wants to have the federal government control the financial services industry. some people calculate that at 15%. so that would take us from 51% to an additional 8% with cap and trade, 59%. and if we add the financial services sector on, that would take us up to 74%. so if -- president obama hasn't even been in office 18 months
and we are already at the point where we could be at nearly 3/4's of the private economy under the thumb of uncle sam, which is why we absolutely have no choice this fall. we have to see constitutional conservatives retake both the house and the senate and then two years from now, we need a president who will be a constitutional conservative president so we can repeal the government takeover of health care and truly unwind the federal government getting out of owning or controlling private businesses. we have no choice. because otherwise, we will go the way of the rest of the wofrled. all we have to do is take a page out of greece. greece is being bailed out by the european union. because of the bailout that the europe union is giving to greece, the euro is dropping in value. the same thing with the united
states. we can't think that just because we have been the greatest power and the greatest nation the world has ever known, we will always continue that way. if we change our economic policies so they have more in line with less of socialist nations, if that's our economic policy that we're embracing, then should we be surprised if the result is analogous to that of countries that are left with embracing socialist economist. and it would shock the american people to realize, mr. speaker, that today, the federal government owns or controls 51% of the private economy. that cannot be. and i know congressman king joins me in putting his marker in the ground, saying that on his watch in congress, he will do everything he can, as i will do everything i can, to get the
federal government in its proper realm of jurisdictional authority. the government doesn't have sovreignty over private business, only private business has sovreignty over private business. mr. king: i do wish to join that pledge in putting my marker here. we have joined together to repeal obamacare, to pull it out, root and branch, lock, stock, and barrel, to eliminate obamacare, so there's not one vestige of obamacare left behind that could reproduce itself and further diminish the vitality of the american people. i recall that president obama as a candidate consistently was crit tall of -- critical of president bush for not -- for not having an exit strategy in iraq he pounded on president bush for not having an exit strategy and that exit strategy
is being used by the man who was so critical. president obama has been involved in huge sectors of the private sector, as the gentlelady has described. more than 51% of our private sector activity and when we add the financial sector to it, it becomes a number that approaches 3/4 as she said. i sent a letter to secretary geithner and a former letter and the response needed to be under oath, it was within the hearing of financial service, an ag hearing we did jointly, the question was if the president was elected at least in part because he was critical of president bush for not having an exit strategy in iraq, what's president obama's exit strategy to di vest the taxpayers of their invested interest in this whole list of companies, fannie mae, freddie mac, the car companies, two
months later, i did get an answer, it took a couple of days for the smartest lawyers i have to decipher the answer. the answer was, we will di vest ourselveses of these asset whence the time is right, only he would know when that was. floffs criteria for the federal government to get out of this business. it appears there's a powerful incentive within the white house and within the progressive, the very liberals in this congress, of which there are at least 77 to continue the nationalization. the management now that they're speaking -- seeking to do of managing all our financial industry, taking over student loans and now every credit account in america and in addition to that, i give a new example that was exposed to me the other day. we have an example of how the federal government take others the insurance industry. they did so in about 1963 or 1964 with the federal government flood insurance program. they argued that the private sector didn't produce enough
competition so that you couldn't buy flood insurance in floodplains. maybe there was a reason for that because you would be flooded and the risk was too high system of they set up the federal flood insurance program to set up competition for the private sector that was property and casualty at the time. in a few years, it came to pass, and it's true today, the only flood insurance you can buy today is under the federal flood insurance program. it's also true that that program is 19.-- is $19.2 billion in the red because their premiums don't reflect the risk, buzz they offer this insurance, and by the way, it's compulsory to buy that insurance if you borrow money under a mortgage loan through a national bank. it seems fema has been assigned by congress and is carrying out an action that expanded the floodplains dramatically so the people in the floodplains have to buy more and more flood insurance. i looked at one area within one
county, within my district where there are 2,200 more properties and 1,100 more property owners compelled to pay for the national flood insurance premium, presumably if you expand the areas that people are compelled to buy insurance and do business with the federal government, then you'll be able to bring this federal flood insurance out of their $19.2 billion in the red. think of what happens when the federal government sticks their regulatory nose in every transaction in america, every credit transaction, every private flood insurance transaction, every health insurance transaction, operates and manufacturers roughly -- and manufactures roughly 2/3 of america's car, probaling not quite that much, actually, and operates the loan market. mrs. bachmann: under the bill being debated right now in the senate if a person has a transaction worth four payments or more so presumably if you
buy braces for your child and you're pay big payments for your child's brateses if you have four payments or more, that's a financial transaction that could come under the purview of the federal government. 10 the orthodontist would then have to conform with regulatory requirements from the federal government. that's how insidious this is getting. as a matter of fact, the bill, i believe on the house side, would give the federal government authority through a new pay czar that's been selected, who would establish the wages of like a bank tell for the peoria, illinois. the federal government isn't just getting into big things, they're getting into every small area of our life. i think we just haven't begun to see the levels of involvement. the other thing you'd mentioned, congressman king is -- and madam speaker, is that you wondered about -- about
president obama and where he's going. there's no exit strategy because the current financial reform bill we're looking at is all we need to know about where president obama and the democrats that control congress want to go. they want more federal government intervention. they want more federal government spending, which necessitates more federal government borrowing which will mean more taxes. what are those taxes? the president has punted that issue to his new commission. we all know a boat load of taxes needs to be raised and we are in all likelihood looking at a new form of national sales tax, the v.a.t. tax, which would be on every item we purchase would have a tax of about 25% attached to it. if you go through the value drive in meal at mcdonald's or a fast food place, though i guess we aren't going to be allowed to eat fast food anymore, that looks like the road we're going down now, instead of paying $1 for that
item, now we'd pay $1.25. all this means real consequences for real people's lives. it means fewer choices we can make and apparently what president obama and the democrats who control congress believe is that the american people have too much discretionary income. they really are the party of big government and of government making the choices over our lives. the republicans have a different view we believe people make the better choices and want them to keep their money. unfortunately, president obama laid all his cards down on the table, as have the democrats who run congress and they made a decision. it's very clear we know because the bills are already before us, anyone can read them online and they want to be involved in the smallest financial transactions of our lives and ultimately they want to decide who will get credit in this country and who won't. that will stifle every one of
us in this country and it won't mean job growth. it won't mean job creation. but we can do far better than that. mr. king: and they decided who would get credit on home loan mortgages based on the cash flow of the welfare check. it didn't work out so well. that's one of the examples -- i'm standing here thinking about this. where would they stop? a party whose policy is change, who don't have any timeless values, there's not even a definition of truth over on that side that they can agree on. it is about change. i've often said that if you give me the magic wand and i could grant to the propro agressive, the liberals, the people who fit that definition on that side of the aisle, their wish, which would be the entire wish list of all the things they could compile on that list between now and new year's and say to them you get all of this all of this, every policy you can possibly dream of, and we're going to give it to you when the ball drops at times square for new year's but the deal is then you have to
clam up and not be clamoring for change anymore, you have to live under all the rules and all the changes you advocate for. here's what i can guarantee you, they'd work night and day to make the list as complete as possible, work right up to the last minute, they'd have an amendment they were trying to slip in as the ball was dropping at times square to bring new year's about, and then when they were granted their wish, they would stay up all night trying to figure out how they got cheated and wouldn't live by the rules granted in their wishes. we believe our rights come from god, we believe in free enterprise capitalism we believe in property right we believe people who work should live better than those who don't. we believe the wealth of the nation is not a zero sum game but something built on the entrepreneurial spirit and the foundations of free enterprise property rights, individual right, not group rights the
destiny of america will be determined by the amount of liberty we can grant to people out of this congress instead of diminish from them and my mission is to go 230r9 and get back out of the congress the rights that rightfully come from god to the people who work sod hard to build this country and not to destroy it incrementally by these huge bites out of our freedom and liberty and the question that comes to me what would a socialist do, what would a progressive do, what would a liberal do that a communist would not? where do they draw the line? this has been a breathtaking sweep of a takeover into huge chunks of our economy and they have designs on big chunks of the economy yet where there's no restraint except the american people and the constitutional conservatives filling the streets of america. they come out with their american flags, their yellow don't tread on me flags, their constitutions in their pocket and patriotism in their hearts and tears running down their cheeks because of what they see
happening to america under this ruling troy troy ka of obama -- ruling troika of oba uh -- obama, pelosi, and reid. we'll have a lot of work to do to clean up this mess. one of the things is on the immigration cards, the flash cards to train people to pass the naturalization test, on one side, it says who's is the father of our country are, it says who is the father of our country? the other side says washington. card 11, i think, says what's our economic system? and on the other side it says, free enterprise capitalism. that probably isn't the case anymore. i want to be able to see my children and grandchildren and every succeeding generation not live the american dream but live the american dream in addition with a higher standard of living and greater aspirations and more liberty
than we had, which is tremendous. this is what is pulling at the heart of america, this is why the constitutional conservatives, comprised of the obama-ites with buyers' morse, the conservatives that don't want a label, the 912 people who have been so activated, all the the tea parties, almost every republican, constitutional conservatives, people understand that our default position needs to be the constitution itself, not some activist judge's idea of what they want this constitution to say but what it actually says, what it's understood to mean at the time of its ratification, mr. speaker, i regret that i wasn't granted credit for the yield to the rules committee. however i would yield back the balance of my time, thank you. the speaker pro tempore: for what purpose does the gentleman rise? mr. king: madam speaker. madam speaker, i move the house
do now adjourn. the speaker pro tempore: the question is on the motion to adjourn. those in favor say aye. those opposed, no. the ayes have it. the motion is agreed to, acordingly, the house stands adjourned until 10:00 a.m. noon eastern on c-span2. >> "washington journal" continues. 8:congresswoman jan schakowsky is a member of the debt commission. a first meeting was today. guest: clearly people talk about what their priorities were. but i did get a sense that we are ready to roll of our sleeves and get to work. host: how do you think this will
be different from all the other commissions that have been created in washington and some of that already looked at this issue of debt? guest: actually a number of commissions have worked. speaking of the 9/11 commission and other commissions that separate out members of congress and people from the public and actually resolved problems. a i think even if we don't come to a total consensus i think a lot of good ideas will come out of it that will actually be translated into legislation. host: do you think -- 14 out of haiti have to agree on recommendations. did you think that is doable? guest: i think probably on some. i don't think we could have a comprehensive report were all of us agree on everything and go out singing kumbaya o. but i think we would have a number of items on which we agree and others we will not be.
host: where do you draw the line in the sand? guest: i think a number of the people of the commission and some of the outsiders think that entitlements -- talking about social security, medicare, and medicaid -- are the first things on the chopping block. and i disagree. i think we have to look at fiscal policies, deficits and debt and how they affect ordinary people. and if we are going to target the most vulnerable, then i think we will be doing ourselves a disservice. so, i think what we have to look at is in a very comprehensive way revenues as well as cuts, what are the appropriate kinds of cuts -- and i would be happy to go into some of the things that i think we could do. host: let us first listen to former cbo director who testified yesterday before the debt commission and what he had to say about the entitlement
spending. here it is. >> recently the public has shown increasing concern over large deficit and the growth of federal debt, but it is clear that few americans understand the seriousness of the problem, the consequences of inaction, or the degree of sacrifice that is required to fix the problem. thus, the commission's first task would be to make it clear and convincing case to the public that, first, significant adjustments to current spending and tax policies are unavoidable, second, that if we don't begin these adjustments soon, our economy's vitality will gradually be zapped, or ability to chart our own course and our standing in the world will erode, our government's capacity to meet crises and address emerging priorities will be constrained, and our dependence on foreign creditors and their influence on policies will grow.
the longer we delay, the greater the risk of a catastrophic economic collapse. third, the magnitude of the required adjustments is so large that spending cuts will have to affect programs we all care about and benefit from and revenue increases will have to come from a wide swath of americans -- in other words, raising taxes on the rich, corporations, holding entitlement programs harmless, closing loopholes, eliminating wasteful or low priority programs, prohibiting earmarks, things like that, are not going to do enough to solve the problem. fourth and finally, the public needs to be informed that the sooner we start addressing the problem, the less wrenching the adjustments will have to be and the more control week, as opposed to market forces or our creditors or in extreme circumstances, international agencies like the imf, will have over the timing, size, and
composition of these unavoidable adjustment. host: congresswoman, your reaction. guest: i agree with a good deal of what he said. i think what is missing from that clip is the view of that right now our problem is not deficit. right now, because of this recession we are in that is caused largely by the collapse of the housing bubble, that we actually need to be spending money in order to continue economic growth and turn the economy around in order to create jobs and the vitality we need. most economists agree this is not the moment -- in fact, our mission is by this commission that by 2015 we should reduced -- reduce the deficit -- so it is medium-term and long-term
that we have to get this budget issue under control. host: not in the short term, but in the long term, what are some areas where you think there could be spending cuts? caller: i think that we could make government much more efficient. this is not mission in pot -- impossible. we could do that. for example, we could do $40 billion in savings from reforms in the contracting process, our whole procurement process needs to be looked at. using information technology, we could reduce the deficit by $15 billion. we also need to make investments that spurred the economy. we have a great capacity as the country but it is be underutilized. that is the deficit as well. investments in education, scientific research, and availability of credit, if we
did not get money out of small businesses, they cannot grow. we need to jump-start new technology and energy and we need to put the defense budget on the table. not to weaken our national security in any way, but we spend as much on defense as every other nation combined. and by 2015 that will be about 20% of our total federal budget. for example -- if we just cut the purchase of half-35 joint strike fighters and half, we would save $4 billion. if we keep missile defense systems in the research phase until they work -- which i think would be a good idea -- we could save about $6 billion. there are a number of outdated cold war weapons systems. so, if we literally do put everything on the table and we
scrub the budget without prejudice and look at all of the pieces, i think there definitely are a tax revenues -- if we close loopholes -- and we have a bipartisan bill in the senate, judd gregg, senators widen and gregg -- tax reform bill's beard looking at corporate loopholes, they suggest we can cut $646 billion from 2011 until 2020, 10 years. personal income tax loophole, $815 billion. a number of members, republicans and democrats, said if we just collect the taxes that are due, we would collect billions of dollars her, and as to make a real dent in the deficit. host: what about social security
and medicare and medicaid? that was not on your list. are you saying you will not agree to any cut? guest: let us talk about that. first of all, social security, for more than almost two decades is not the problem. the social security is generating surpluses that actually right now certainly until 2015 are reducing the deficit because those numbers -- because of the surplus in the trust fund are causing the deficit to be lower. so, social security right now is not an issue. if we are talking about the solvency of social security for another 75 years, i think there are some simple things that we can do. right now people pay into social security only up to $106,000 of income. were we to raise the cap, the wage cap, who pays and -- i am
not saying take it off altogether -- we could collect more money. right now, if you are 62 years old, you can collect social security, but you sacrifice the amount of money you make by not making until your full retirement age. what if we said that for the -- i don't want to retire at 65, let's say. let us say i'm lucky enough to be reelected and i want to stay until 70. maybe there could be incentives for me to postpone my retirement. right now at age about 66, you are collecting social security, what did you want to or not. if i postpone that, that would save the trust fund money and maybe, at the low bid more, but his salt -- but still there would be a net gain appeared that are a number, i think of our creative ways that don't cut benefits. the average senior citizen makes $18,000 a year. we are not talking about wealthy
seniors. by and large -- let's remember, social security is also an insurance plan for spouses that are widows or widowers and children and persons with disabilities. my grandchildren, by the way, because they lost their mother, did get benefits from social security. believe you me, that will help them with the college fund. h. carl -- host: medicare. guest: medicare has been on the table. the health care bill -- the congressional budget office projects that $1.20 trillion will be realized in savings and, in debt reduction, because of the bill. so, there were a number of people, including reishauer who said less than give this a chance to see it works -- let us give this a chance to work.
bending the cost curve and hulls -- healthcare, a driver of the deficit. i think are some other things we could do as well, even now. but i think that in terms of going in wholesale into health care, let's get a chance to this health care bill. host: the first phone call comes from philly, jim on the republican line. caller: what you are saying is enough to drive anybody over the edge. there is no way that this new health care bill is going to save a dime. it will cost everybody more money. i just don't want to come out and say this -- but i will say it. you are part of the problem, not part of the solution. this is a debt commission is, i would say, almost ridiculous. it will never amount to anything. it will not cause anybody to save any money. and these plans to -- you say it
does not matter -- we are going to have to cut services. there is not any way. medicare is bankrupt. medicaid is bankrupt. social security is bankrupt. -- that is not -- guest: that is not true. social security certainly is not bankrupt. until 2037 it will have plenty of money to pay benefits. i certainly don't want to push you over the edge but let me tell you some of the ground rules of the commission. . guest: we agreed that we would accept the judgment of the congressional budget office, an nonpartisan, independent group, that we would accept the numbers.
the provisions of the new health care bill will in fact reduce the debt, will cut costs in health care by $1.2 trillion over the next 20 years. not so much about $126 billion in the first 10 years. but by forcing more efficiencies in the health care system, getting away from what we call fee for service where anything that is billed to medicare, they pay, but doing much more scrutiny, encouraging more combined payments and different kinds of cost-culting methods that we could actually do that everyone agreed that we're going to accept those c.b.o. numbers. so the facts are that it will bend the cost curve. host: woodbridge, virginia, angel, on the democratic line. guest: thank you. i'm a big fan of yours, i think
everything you've been doing is awesome. representative schakowsky. i'm a little nervous. have you thought about putting homeland security on the table and cutting them down to like 5% and putting them under the umbrella of the c.i.a. or something? host: what about his idea? guest: as i said, i think we ought to put everything on the table. clearly a lot of functions of homeland security which include all kinds of disaster relief, which do control immigration and those kinds of things, can there be efficiencies? i absolutely think there could be. do we want to say, 5% cuts, you know, sort of, set an arbitrary number and say, we're going to cut everything, including homeland security by 5%? i think that's kind of a
cop-out and even, i think it could really hurt us to set some sort of -- a target, a goal, those are good, but i think that setting some arbitrary, across the board cut level i think would be a bad idea. certainly homeland security, we ought to take a good look. host: our viewers can send us twitter messages at twitter.com/c-spanwj. this one says, will taxes be raised? guest: no the magazine, i guess they're talking about, they may be talking about health care costs in general, and that's why we have to look at a system-wide, not just medicare, medicaid, but what about all of the expenditures that individuals, etc., make in health care. feinstein and i had a piece of legislation that would allow the federal
government to have the power to say to companies like wellpoint, and thumaanthem, whod their rates 39%, we would give the government the power to ask the question if that is correct. they could say to insurance companies, we will not allow you to raise those rates that high. 24 states already have the ability to do that, but the federal government does not. i think we can help lower costs, if we say only justifiable rate increases. we are not against profits, but they cannot consumers.
-- gouge consumers. host: next phone call. caller: i feel bad for politicians on both sides. you all are being attacked. the american system. don't you believe a public campaign-funding system would be advantageous to it all, as far as the disappearance of the idea of conflict of interest? guest: i could not agree with you more. i think we need to get the special interest money out of campaigns. there are so many things wrong with the system right now.
because campaigns have become so expensive, we have to spend so much of our time trying to raise money. inevitably, we go to special interests that had an agenda. if we were able to get that motivation out, we would be able to restore confidence in the american people. and no question, when we vote, we think, how is this going to fit with my constituents, not how is this going to sit with my sunders? even the appearance destroys confidence. -- with my sponsors? but i agree with what you say. we need more campaign to whics h
restore integrity. host: shall be on the republican line. colorado, i think the general fund helps to keep the deficit down. i wonder if you would ever vote to take social security account of the general fund so that the stigma of a social program could not be attached to it. guest: i think the fact that social security is there does reduce the deficit, but i do not think that that create a stigma for social security. certainly, we want to protect the trust fund, so is available for payment of benefits. that is torture. -- for sure. we do not want to run all other
kinds of expenditures. but the ious in the trust fund are very secure. social security is one of the most the effective and popular programs that we have right now. and more important than ever. more and more people are finding that private pensions are disappearing, investment that they had paid have taken a deep dive. maybe you know already, but a quarter of recipients live -- rely on it as 90% or more of their income. 60% find and then they need a social security for more than half of their income. so is no longer just one leg of a three-legged stool.
now it is almost like a pedestal, where social security is holding up retirement security for most americans. i think we want to protect that fund. i do not know if we need to separate that from the general, but i think we want to make sure it is there for seniors and persons with disabilities, and children. host: still on the democratic line. canton, illinois. caller: i have been a lifelong democrat and i am ashamed the way the government is spending to get some of the recovery most major economists have claimed that the stimulus did nothing. it did not lower unemployment, t.a.r.p. is a joke. this is only taking care of 1/1
thousand of the people that it was intended to help. you do not understand the major concern of this economy is getting people back to work. the only way you are going to do that is to put tariffs on imported goods. we need to build up our own industries and compete. host: and a headline in the "washington post" -- guest: let me respond specifically to what you said. most economists agree, in order to address a recession, like happened in the depression years, the government has to make up for the loss of revenues that are in the private sector, in order to stimulate the economy, in order to put money
in people's pockets. not just to build up banks. by the way, most of that t.a.r.p. money has been repaid -- i think we should demand all of it repaid with interest. we could argue tariffs, but that is a separate discussion. the injection of money into the economy is the thing that will promote growth. the other thing you said is also not true. the congressional budget office believes the recovery act has created a couple million guns, some of which would have been lost -- jobs, some of which would have been lost, and yes, we have lost jobs, but we are
now in the positive column. that is directly attributable in the 1930's. in the 1930's, there was a double dip recession because that idea prevailed and the government stop putting money into the economy and we had a second recession. most economists believe that in the short term we need to be creating jobs by spending money, saving jobs as well. i am sorry that you have lost touch faith in government, but we have been there before. we had a surplus under the clinton and ministration, so we can do this. the american people and your government can do this. host: francis on the independent line. go ahead.
caller: i believe you were encouraging incentives for people to delay receiving social security benefits. it was my understanding, from the social security, where they discussed retirement age considerations, that i would receive an additional 8% and i delayed retirement from social security after age 70. is that still in effect? guest: yes, but we can do that even further, if we want to appear could we can increase the incentives for people to delay retirement in a way that the actuaries can figure out how we can maximize the benefit. it is an idea coming from both sides of the aisle. i think there are a number of ways we can encourage people who
are healthy and want to continue to work to defer their social security even further, 70, 71. we have extended longevity, people are living longer. some are fortunate enough to be able to work. others, of course, are being pushed into early retirement, so we have to make sure that those benefits are there for them, if working is not an option. we want to make sure that helping people is feasible. host: baltimore, maryland. gary on the republican line. caller: i had a question on the defense budget. i agree, there needs to be some attention paid in there. i would caution going after a
big project like the joint strike jet fighters. instead, look at the way that the government does contracts. there are numerous cases where the government has component within itself to perform certain functions but is not allowed to because it would be in conflict with the civilian sector. there are components of the government that could build and launch its own spacecraft but are not allowed to. yes, the defense sector should be looked at, but not a large, big projects that are easy to hit. guest: i have been involved in the issue of private contractors, mostly on the military contract signed, the use of companies like black water, which has threatened our
mission, as well as cost of money and i really like your idea. what are essential government functions, and why can we do this as a cost-saving measure? i appreciate the suggestion. to the extent that the united states could be in the business of the defense rather than contracting out at a much higher cost, that is something that we should be looking at. host: this viewer on twitter is concerned about government jobs -- guest: i think that is right. we ought to look at that so that we can attract the best and brightest.
maybe if we were not wasting money, as the dumb and suggests, by going up to the government, we could perform those functions ourselves, and we could be more competitive, in terms of our salaries. host: columbia, tennessee. good morning. caller: good morning. i appreciate y'all so much. c-span is the window to all three branches of the government. we can see what is going on in america. i heard senator dodd mr. de talking about financial reform -- guest today -- yesterday talking about financial reform. just like in the health reform bill, everybody came up winners,
except for the people in america. democrats and president obama had health reform passed. and then you had the republicans -- they watered it down so much insurance companies had a great windfall from it. insurance companies, of course, are the ones that are rejoicing. and they came out not only with their premiums and consolidation of power, but they also came out with a new group of the enrollees where the government will make sure that they become part of the system. guest: i think this week, let me say, we will see financial reform, wall street reform passed, and it will be a good, strong bill to make sure that we no longer have financial institutions that are too big to
fail and that will create a consumer protection agency for financial consumers that will be able to be the watchdog for consumers. i look forward to that passing and i think it will be a big improvement. in terms of the insurance companies, right now, this legislation says 80 cents to 85 cents of every dollar is going to have to go to health care, cannot go to cdo salary, to profits. -- c. itceo salary, to profits. and if they have these kinds of large rate increases, they will not be able to go into the new exchanges, and along in 2014 that will give them access to the big markets of consumers.
senator feinstein and i have legislation that would also get a grip on, and not allow, and these huge, unjustified rate increases. by the way, they are not necessarily so anxious to get everyone in. up until now, they have been able to carry pick their customers. recisions, canceling policies when you get sick, that is gone. they have been able to exclude people because of pre-existing conditions. they will not be able to do that anymore. it is not that insurance companies have popped open the champagne. they are going to have to conform to the new rules that are going to make sure that finally almost every american
will have access to affordable health care in the country. host: congressman schakowsky is a member of the debt commission, which president obama created. we have today tweet -- do you think a value-added tax is a good idea? guest: and the discussions yesterday, there was not a lot of talk from anybody about a vat. some thought that this commission was a stalking horse for that. the concern i have with that is that it can have aggressive consequences. not me explain what i mean.
-- let me explain what i mean. we have to look at who this affects. then we have to decide, is this the right way to do it? i think a value added tax has the disadvantage of making middle and low income people pay even more of their income -- is a kind of sales tax. i thought it was interesting -- it did not really come up yesterday. host: guest speakers did not bring it up? guest: maybe a couple of sentences, but it was not laid on the table and a serious proposal. host: ben bernanke did say that congress need to look at the tax system over all, that that could be revamped.
what do you think about that? guest: absolutely, there are a number of ways where we can close loopholes, simplify the system. i do not know how much the commission between then and now is going to talk about an overhaul of the tax system. certainly, and marriot worthy of our scrutiny. there is a subcommittee on revenues. maybe they will get into the systemic issue of the tax policy. host: the commission meets this week. then there will be sub committees. how often will you meet, which one will be be serving on? guest: they have not been organized yet, but i am interested in the mandatory spending that would include not only the big three, but all the mandatory spending of the government.
discretionary spending as well. i think those are the two or will choose. then there are revenues. host: next phone call. ray on the independent line. caller: first, if i could, how many members in the commission, background? where could i get that information? host: there is no website for that commission, is there? our producer was unable to find one. guest: if you google, it is called the fiscal responsibility and reform program. if you look for the fiscal
responsibility in reform members, i am sure that it will come up. we have three democrats, three republicans, the co-chairman, -- 18 members. there are some business people, labor leaders. caller: ok, fine. let me jump in with a question and comment. i just heard you say, looking into the television, that we are going to grow ourselves out of this. guest: no, i do not -- caller: i believe you did. have you reviewed david walker's piece? excuse me.
you know that we have 60 trillion dollars -- $60 a trillion in debt not too far in front of us. i am talking to you as an accounting professor. there is no way we are growing our way out of this. second, just like everyone else, you have made comments that we are going to keep it in the general fund of social security. that is why we happen to have a multibillion-dollar foreign investment in our trust fund. it is because we kept using president after president, democrat and republican, kept using the surplus after the alan greenspan commission to resolve this program, kept using that
surplus to offset the real deficit. since you do know about david walker's program, which i assigned as extra credit to my students, you know that we did not have a $455 billion deficit with bush in his last year, we had a $675 billion number as the deficit. just like every deficit before, including the clinton years. there was not one clinton year where we had a surplus, but i will say that we had the lowest spending and then, when we had a mix of republicans and democrats. host: let me have the congress will then respond. guest: -- congresswoman respond.
guest: in the short term, when i am saying is i think most economists agree that now is not the time to cut spending because we could find ourselves in a double dip recession. david walker and i, by the way, i agree there are nis no crisisn social security. that does not solve your problem with the general budget. you are right, in some ways, masks the true extent of our deficit and debt. and i agree that we are going to have to do some major things in the future to make sure that we get the economy in balance. but i think it is this mix of investments, increasing revenue, and that is what we're trying to
do, to figure out, what is the proper combination that is going to make sure we do not settle our grandchildren with crippling debts but at the same time making sure they are educated, that we fund innovation, that we make sure team usa is no. 1 in the kinds of technologies that are going to fuel the world. so we are going to have to spend the money hos. host: are you still there? we only have 30 seconds. please follow up fast. caller: so if we agree that we are not going to get our way out of this problem with economic growth, there is only one other way, and the entitlements are a problem, and that has to be cuts.
guest: we have a number of problems. health-care spending is clearly a driver. it is constantly medicare, medicaid. we think we have made a start on that. i agree, we have to look at the long-term solvency of social security, and first of all -- in the ending, these are not crises that our great country cannot manage. you have a great group of people who want to do this, and people should have confidence that, not just our commission, but our country will be able to secure our future, and the united states of america will still be no. 1. host: we are going to try to get one last phone call. william on the republican line. new haven, conn. caller: i have a proposal where
we can get all the wealth that we want to. 200,000 miles from us, the gold rush in california will be nothing compared to what is up there. we might just have the technology in our country to go get that gold. all we have to do is put two satellites around the moon and survey for natural resources. guest: maybe the answer is in the sky. thank you. host: talk about your work in the debt commission and who you will be working with closely, how do you expect this work to go over the next few months? guest: i am looking forward to the committees. that is when we re